All Forum Posts by: Mitch Kronowit

Also remember this when comparing rents - two nearly identical places, one renting for $1,000/month, the other for $1,100/month - rented just about the same time. Why the difference?

Answer: The tenants paying $1,000/month signed a one-year lease, the others are paying month-to-month.

I've been accepting personal checks for over a decade with hardly any problems.

If you don't trust your tenant to write you a personal check, perhaps you shouldn't have rented your place to them.

Our carrier calls the coverage on our rental properties "Fire" policies. They cover damage from, duh, fire, but also from flooding (broken pipes), and other hazards. Our LLC and ourselves are also covered by $1 million for liability should either of us get sued.

Are you asking about workmen's compensation? In the state of California, licensed contractors are required to carry their own Workmen's Compensation insurance, however, many unlicensed handymen will pay for their own coverage as well.

If an unlicensed and uninsured handyman gets hurt on your property, the property owner can be sued, especially if the work being performed required a license (the property owner is considered the employer). This is where liability insurance comes in. In California, a homeowner's liability policy must cover workmen's compensation coverage for any employees of the household as defined under the Labor Code. However, casual one-time domestic work under 52 hours is exempt under this Labor Code. So as you can see, it can get pretty muddy.

Basically, we hire handymen to perform simple, non-structural, ground level tasks, such as replacing a sprinkler head, patching some drywall, painting baseboards, or very basic electrical/plumbing repairs (replace a switch/faucet). I don't need a licensed contractor and their $80/hour rate for things like that. For roofing repairs or anything requiring a ladder, structural framing, running new wires, pipes, or HVAC work, we get a licensed contractor.

No tenant beats a bad tenant any day of the week.

I'll let you know as soon as I figure it out. So far I haven't sold a thing, only purchased.

For me, it was fairly straight forward. I purchased my first property in 1992 as my primary residence. After living in it for about 5 years, I moved away and began renting it out. Still own the place and our current tenant has been there over 4 years.

The only tenant I ever evicted was "self employed". Not to say that is a deal breaker, but our tenant also had a good credit score (>700) and still defaulted after only a couple of months. The economy is rough on small businesses, even in the best of times, and somebody with their own business would need to prove to me years (>5 at least) of steady income.

As far a taking the extra deposit, that's a very good move because you may need that money to help pay for an eviction, which in California can cost at minimum $1,000 in legal fees alone and much more if your tenant knows how to drag it out. Is this the best applicant you can find?

If the unit is unfurnished, you may only hold a maximum security deposit equal to two times the monthly rent. Your posts makes it look like you're collecting almost two months rent PLUS the "standard" deposit, which is typically a month. So, no, you cannot collect over two months rent as a security deposit unless the property is furnished. At that point, you're limited to three months rent.

Eviction in California can proceed after posting a 3-day Notice to Pay or Quit. If you're lucky, you can have the tenant out within a few weeks. However, if the tenant knows how to work the system, they could stay for several months unless you or your attorney are very sharp and know how to defuse all their little tricks.

Finally, make sure you place in your lease that the tenant will be responsible for paying all legal fees and costs of collection in the event of an eviction. You may never collect a dime, but at least it's in there.

I wish I had some first-hand experience to share with you, but I don't. What I do have is a good friend who owns an investment condo in a very popular ski area.

Here is what I can share from her experience. She purchased this little chateau in the mountains so she could rent it out for high weekly amounts during the ski season, but still keep it vacant on occasion for her personal use. The problem with this approach is it wasn't really a big money maker (the summer months are very hard to find tenants), but she had a good full-time job and could afford any small losses. After all, she still had a great winter getaway several weeks every season so she could snowboard.

However, when she was out of work, she could no longer afford to do the seasonal vacation rental. Instead she would find a long-term tenant, a local resident of the town, that needed full-time housing. On a weekly basis, her condo had to be deeply discounted from its winter rates, but she would get somebody in there year-round and not lose money on the rental. Alas, she also lost her personal use of the place.

Currently, she enjoying the best of both worlds. She found some wealthy corporate CEO type (who lives near me in fact) who rents the condo year-round, but only uses it part-time, during holidays or last-minute getaways. What's great about the arrangement is while they're not using it, they let my friend us it herself.

So there you have it, 3 different ways of utilizing a vacation rental: Short-term seasonal tenants, long-term local tenants, long-term non-local tenants.

I do half and half. Half my properties, the ones that are in lower middle-class, blue-collar areas, I have professionally managed because they are located about an hour away and tend to require more attention (maintenance, tenant-issues, etc.). The others, which are upper-scale, middle-class, white-collar properties, I manage myself.

I'm still undecided which I prefer. Although the cost of hiring a manager (7-9% of collected rent) is a little steep, when something comes up and they handle it for me, I'm grateful I don't have to deal with the headache.

I don't because I didn't spend it to acquire the property, I just earmarked it. It's still mine.

If you do spend it later to fix something, it becomes an expense and part of that fabled 50%, which will get replenished by your actual monthly cash-flow from the property, not the average.